Tag: Controls

Global Threat Assessment
by John Cusack

Despite the limitations presented in estimating criminal activity designed to be hidden, the results in the Global Threat Assessment present a bleak picture.

Criminal markets are generating more illicit funds than at any other time in our history, with ever more harmful effects inflicted against every Country, against billions of people and against our increasingly fragile environment.

We are witnessing the transformation of organised crime into very big business, leveraging networks to connect criminal actors, adopting poly criminality, embracing new cyber tools and opportunities afforded by the transformation to digital.

How big, which Countries, by what Methods and by which Gangs, is summarised in this Global Threat Assessment, using over 100 publicly available studies or reports from credible sources, together with personal observations and recommendations from the author.

On a recent trip to Australia, Financial Crime News caught up with ANZ’s Guy Boyd, now Chief Compliance Officer, in Melbourne, with responsibility also for Financial Crime Compliance. In this interview Guy answers questions on ANZ, the threats and risks facing Australia, New Zealand and the wider Region, challenges and opportunities and highlights the work of the Fintel Alliance, the public private partnership making great strides and an example to many. For more information from FCN on Country Threats on Australia see HERE, and on New Zealand see HERE:

1 FCN: What’s your current role and how did you get to this position?

GB: Since July this year I have been ANZ’s Chief Compliance Officer. Interestingly, I moved from private legal practice to ANZ in 2006 in its legal team and later into the Risk function to work on establishing a sanctions compliance response and capability.

Illegal Fishing represents one of the largest markets open to and exploited by organised criminal groups, but beyond overfishing and the environmental challenges this brings, other serious crimes are also involved, including drugs and human trafficking, corruption and tax evasion, particularly effecting developing Countries. its time Illegal fishing was considered as a major financial crime issue as well as an environmental one. For more read the Intelligence Briefing on IUU Fishing by FCN.

Fishing Facts

With fish and other aquatic animals an important part of many peoples diet, it’s estimated by the Food and Agriculture Organization (FAO) of the United Nations, that we catch approximately 171 million metric tons (likely more than 2 trillion fish) annually (2016) worth an estimated USD362 billion.

The Wolfsberg Group has now published materials supporting the implementation of the Correspondent Banking Due Diligence Questionnaire (CBDDQ) – Watch the video overview about the CBDDQ, its development and purpose and use the 12 videos covering each section of the CBDDQ. These new tools should be used in combination with the CBDDQ itself as well as previously published Completion Guidance and FAQs document. These materials have been designed to aid ‘capacity building’ in the industry, as well as support the objectives of the G20 and other supranational organisations towards a well supervised and more harmonised regulatory standard in correspondent banking.

The Wolfsberg Group expects that these materials will be very useful to public sector entities as they work with banks and countries looking to enhance their own financial crime compliance programs, as well as to banks and other financial institutions for their own training needs.

Financial Crime News sat down with Natalie Merrylees to discuss her thoughts on the purpose, challenges, opportunities and the future of Assurance, as well as the importance of trying to identify “hotspots. weak spots and blindspots,” the use of technology, regulatory expectations and much more besides.

FCN: What is the purpose of Assurance?

NM: Assurance provides a semi independent spotlight to reconfirm whatever needs to stay working, is working, or alternatively, is a whistle to gain attention when problems are Identified or aren’t being fixed. In many organisations right now, this role is one of oversight of the firm’s policies and procedures, working to a defined framework and method, and taking its baseline data from the Firms own risk assessment activity

FCN: What do you mean by Semi-Independent

NM: By Semi Independent I mean, we are part of the second line of defence that provides a programme of ongoing monitoring and testing of both the business’s financial crime controls, some of which are carried out of course in the second line.

Some people have argued that the next frontier in the fight against financial crime is using new technology to detect money laundering. New technology could well be the next frontier, but new technology alone is never the answer. It forms a part of the people, process technology and data mix, that is brought together to find solutions to problems. Whilst new technology for example could help the industry in producing less false positives or be able to handle them more efficiently, we have to expect more from ourselves and our partners than simply doing less of the work we shouldn’t be doing in the first place.

The bigger challenge is to make sure we are able to accurately understand the true costs and benefits of the new technology, and importantly whether it helps those relying on our work to more often and more effectively interrupt the illicit actors benefitting from financial crime.

Having attended the FATF Consultative Forum on the 6-7th May, 2019, I was invited to present on “the latest trends / priorities in the Public and Private Sectors on AMLCTF.” Here is a brief summary of my presentation, which is based on work progressed within the Wolfsberg Group.

Modernising the Fight against Financial Crime

As we seek to modernise the fight against financial crime, we need to put “effectiveness” ever more at the centre of what we do. For FI’s technical compliance assessments are extremely challenging but also fail to measure contribution or effectiveness. In order to support improved effectiveness the areas that need additional attention include (see chart below):

Whilst there is no silver bullet, real progress is dependent upon a common understanding of what outcomes we want to achieve and what then should be the priorities. Continue reading

This paper sets out what effectiveness could mean in terms of a Bank’s response to fighting financial crime and how this can be measured and tested. It argues for a new focus on effectiveness as a better way to measure and assess financial crime compliance, as an alternative to the current approach of testing through checklists and file reviews to determine compliance with regulatory expectations.

Many leading FI’s believe compliance with regulatory rulebooks, whilst important, cannot be equated with fighting financial crime. Regulations are imposed largely as a reaction to past events, whereas fighting financial crime needs to learn from the past but look to the present and to the future in order to be effective.

Over the two years since the publication of the 2017 Trade Finance Guidance, the working group made up from Wolfsberg members, BAFT and ICC began focusing more deeply on two important products that are prominent in global trade, namely open account trade and FI Trade Loans. For open account trade, which simply put is trading activity between buyers and sellers on their own terms without the need for traditional documentary trade finance products, there are fewer specific additional controls to be considered for an FI.

Naturally, where either buyer or seller is a direct customer of an FI, the usual transaction monitoring will be working to identity potentially suspicious or unusual transactions. For Bank-to-Bank Trade Loans, which is a popular and important trade finance product used to help fund another FI’s trade finance activities, these do present specific risks that we have highlighted, which include both TBML and sanctions risks. Continue reading

• whilst sanctions screening is a primary control, it is not foolproof and needs to be deployed as part of an effective wider sanctions compliance programme; and

• where a risk based approach may be appropriate, including documenting a reasonable risk appetite, notwithstanding the strict liability nature of sanctions compliance.

Consideration has been given to topics such as what is meant by sanctions screening, looking at both reference/customer data and transaction screening; the timing of screening; technology and the use of automated systems; the criteria for alert investigation, as well as testing and quality assurance. The guidance covers a number of areas that are most common to sanctions screening, including: the following:

the programmatic approach to sanctions screening is explored, including how to employ a risk based approach.

Seventy years ago, this week, the United Nations Convention for the Suppression of the Traffic...

Publishing FCN 3

When I started Financial Crime News, I wanted to offer a digestible collection of both interesting and relevant materials to arm financial crime fighter’s with additional tools to help enable them to do their work. Read more…

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